Siemens AG will buy Iberdrola’s 8.1% stake in wind turbine manufacturer Siemens Gamesa Renewable Energy (SGRE) for a total amount of €1.1bn ($1.21bn) from its own resources.

The transaction approved by Siemens’ supervisory board represents a purchase price of €20.00 per share, which corresponds to a 32% premium on top of the average Siemens Gamesa share price for the last 30 trading days.

All legal disputes between Iberdrola and Siemens will be settled, and in addition the Spanish utility, Siemens, and Siemens Gamesa have signed a cooperation agreement that covers certain projects for wind power generation and for improving the distribution grid.

“Way before anyone else, Siemens and Iberdrola had taken the first step to a necessary consolidation in the sector. We have created a leading and robust supplier of renewable energy and believe, that SGRE still has considerable potential to grow and create significant value,” Siemens chief executive Joe Kaeser said.

“SGRE is a vital cornerstone in the new Siemens Energy portfolio in order to shape the necessary energy transition from conventional to renewable energy. Time has come to take this mission to the next step.”

Siemens expects that additional annual savings of up to €100m can be realised by unwinding the shareholder agreement and through intensified cooperation between Siemens and Siemens Gamesa, resulting in a net present value of about €900m.

As part of the spin-off and subsequent public listing of its Gas and Power business, Siemens will contribute all its shares in Siemens Gamesa to the new Siemens Energy company, which will hold 67% of the voting rights at Siemens Gamesa, and thus have a two-thirds majority at the company’s annual general meeting.

“2020 is a pivotal year in which climate protection has reached the top of the global agenda. We are convinced that the energy transition offers many opportunities for Siemens Energy,” said Michael Sen, member of Siemens managing board designated CEO of Siemens Energy.

“With our diverse and constantly growing renewables portfolio we can deliver tailored solutions for low carbon leaders and energy seeking countries alike.”